As I said at the end of Part 2, legal costs are a major problem in litigation, including but not limited to libel law (and not limited to the UK, either). The costs problem I talk about in Part 2 is common to all civil (that is, not criminal) litigation in the UK. Civil litigation includes things that most normal people have heard of or have unfortunately had some involvement in such as you suing for your personal injuries after involvement in a road traffic accident, or after slipping on the floor of a shop, or boundary disputes between neighbours. It also includes commercial litigation such as disputes about whether an insurance policy covers a particular risk, or banking disputes (not just fraud), disputes arising out of construction projects and property disputes.

In all of these cases, the winning party is always out of pocket to the tune of about 25% of his legal costs. And when your legal costs can easily amount to £200k or more (sometimes much, much more – in the type of heavy litigation I do, costs on both sides are frequently in the millions), that is a very big hole.

And that is not all. Any party in any litigation, no matter how brilliant their case is, must also take account of the risk that he will lose and be ordered to pay the other side’s costs as well as bearing his own lawyer’s costs. For an individual, this usually represents complete disaster. It is easiest to see this using hypothetical figures. Say your legal costs are £200k. The other side’s are probably about the same. If you win you have got a hole in your pocket to the tune of about £50k. If you lose, you are going down for about £350k.

For an individual, litigation usually represents gambling with their house. For a small business, it is gambling with their business. For a commercial entity, things are not quite so bad because they have litigation budgets and, of course, large companies tend to be sophisticated litigants who are aware of the costs risks and have other good reasons for wishing to pursue (or defend) the action.

For an ordinary person, costs of this magnitude (just the ones for their own lawyers) can easily prevent them from litigating at all, even when they have a good case and the defendant really ought to be made to pay. This is known in a piece of depressingly Birtspeak jargon as the problem of access to justice.

Enabling Access to Justice

For years the concern was to ensure that individuals and small companies were able to obtain the redress that they were entitled to by law.

In 1998 there was a wholesale review of civil litigation procedure and, in particular, costs. Lord Woolf (another law lord) effectively invented some new means by which individuals could fund litigation, which came into effect in 2000. There were two major ways.

First, the CFA (Conditional Fee Agreement). A lot of you will have seen these on the telly in those ambulance-chasing adverts, described as a no-win, no-fee agreement. Anyone who has actually had to take one out will know that it’s not quite as simple as that.

CFAs come in two forms. The first is where the lawyer agrees to be paid at a discounted hourly rate during the course of the litigation (so that the litigation itself is relatively cheap to run while it is going on). If you lose, you only have to pay the discounted fees. Then, if you win, the lawyer gets back the discount on his fees plus an uplift known as the success fee to compensate him for being kept out of his money for the duration of the litigation (usually between 1 and 2 years) and to compensate him for the risk that he wouldn’t get anything extra at all if you lost. The idea is that because the other side will basically be paying your costs if you win, you don’t care about the uplift.

The second form of CFA is where the lawyer agrees effectively only to be paid by you if you win the litigation. In those cases the success fee uplift is usually higher, again the reasoning being that it is basically to be paid by the defendant. These have the advantage for the litigant that the litigation is free while he is conducting it. Effectively the solicitor is lending the litigant the money so he can sue (or defend).

Lawyers are not generally known for their wild generosity (and anyway, it’s a bit of a weird idea that the whole costs risk should move to the lawyers in circumstances where they’re just doing their job and the outcome of the litigation is not within their control).

So a new form of insurance called After The Event (ATE) insurance came into being. You can insure various different risks.

A lawyer will probably not agree to enter into the second form of CFA unless you agree to take out an insurance policy which covers his fees (not the other side’s fees) in the event that you lose (it is for this reason that no-win no-fee agreements don’t really exist and you should ignore any advert that tells you they do).

You can also insure the risk that you might lose and have to pay the other side’s fees. The premiums for this type of policy are much higher because (a) litigation is a risky business and (b) as discussed above, the total bill can be very high.

To put some figures on the above:

Success fees are often put at 100% – ie if you win the case, your lawyer is entitled to claim double his fees (in principle off the other side because the loser pays). So your legal fees of £200k suddenly become £400k.

ATE insurance premiums can be anything from £25k to much, much more (well over £100k). If you win, you can claim your ATE insurance premium back off the other side as well.

Chilling effect

The aim of all this was to make sure that ordinary people were not shut out from the law just because of legal costs.

However, the effect of it has been that defendants who lose their cases are massively penalised in costs (even more than they would be already). Now before you say, well: they deserve it, you need to remember that most cases are not clear cut, that there are two sides to every story and a defendant might have a perfectly respectable case which he is perfectly entitled to run to trial, and still lose.

This is a particular problem in libel cases, because these are usually far from clear cut factually (and the allegation that has been made might be quite hard and/or expensive to prove in a court – such as Dr Ehrenfeld’s terrorism allegations). This means that any defendant in a libel case (usually a publisher or newspaper plus the actual author of the piece) has to consider what they will be paying if they lose, not only what they will be paying if they win.

Since claimants in libel actions always take out CFAs and ATE insurance, the final costs bill can easily be absolutely enormous. The inequity of this is compounded by the fact that even rich claimants, who could easily afford to run the litigation without help, take such measures. In other words, they use the existence of CFAs and ATE insurance as a tactical pressure on the defendant (or sometimes the other way round).

A table showing payments made by defendants in libel cases (whether after judgment or as part of an agreed settlement) can be found here (it is appendix 17 to Jackson LJ’s preliminary report discussed below). You can see that in many cases no or hardly any damages for the actual libel were paid at all, but the costs were still horrendous. Even where substantial damages were paid, they were dwarfed by the costs. The cases at the bottom end of the table where the costs are pretty low will be those that settle at a very early stage.

This has the effect of making publishers and newspapers more cautious about what they will publish. It also makes defendants more likely to retract whatever was said and/or settle the case in other ways, even if perfectly good defences are available to them. In other words, it has a chilling effect on freedom of speech.

The Index on Censorship and PEN report is dead right on this point. Their proposed solution is that base costs are capped and that CFAs and ATE premiums should not be recoverable from the defendant.

Solution?

I’m afraid it’s not changing the law of libel. This is a very widespread problem which has a particular very serious effect in libel cases.

You probably won’t be particularly surprised to hear that in legal circles this problem has been discussed and complained of for quite some time. Back in November 2008, Lord Justice Jackson (a Court of Appeal judge) was asked by the government to carry out a wide-ranging review of civil procedure relating to costs and in particular methods of funding litigation. Lord Justice Jackson is of course a clever man (you don’t get too many thick judges) who has a particularly detailed and careful approach to his cases. He was therefore a very good choice to carry out this review, which easily wins the title of Most Tedious Task of the Decade.

He produced a preliminary report in May 2009 and his final report in January 2010. You can get hold of both of them here. They are very, very long. Luckily the bits you are interested in are relatively concise (and the actual report itself is quite readable as Jackson LJ is writing for the lay person).

The Executive Summary is short and tells you the main recommendations. You’re interested in paragraphs 2.1, 2.2, 2.6, 2.7, 3.2 and 5.10. The discussion about recovery of CFAs and ATE premiums is at Chapter 10 of the final report (pages 108 to 112 in particular). The specific discussion of defamation actions is at Chapter 32 (page 319 onwards) of the final report.

In summary, what is proposed is this:

1. CFA uplifts and ATE premiums will no longer be recoverable from the losing side. The winner will have to bear these costs out of his own pocket.

2. Damages for defamation should be increased by 10%.

2. A regime of “qualified one way costs shifting” should be instituted.

I am in complete agreement with all three proposals.

It will be obvious that the first proposal will go a very long way to reducing the chilling effect on freedom of speech of the current costs regime. The second proposal is there to ensure that a defamed individual who needs CFAs and ATE insurance because he is of modest means does not end up with nothing having won his case (it is worth noting that damages in defamation actions in the UK are pretty low in any event – again, see this table). The third proposal is there to ensure access to justice for the individual but requires a bit more explanation.

“Qualified one way costs shifting” is a horrible piece of jargon. What it essentially means is that the Court will be empowered to take into account the financial resources of the claimant when making costs orders at the end of the case. As Lord Justice Jackson comments at paragraph 3.7 on page 325, the paradigm libel case is one where an individual of modest means sues a large organisation such as a newspaper. In the usual type of case, therefore, it is the defamed party rather than the defendant which has no resources. It is easy to forget that cases like the BCA’s action against Simon Singh are atypical. So, depending on the circumstances, in an appropriate case the Court would be allowed to order that despite the fact that the claimant had lost the case, the claimant would still not have to pay any of the defendant’s costs.

The proposed rule is as follows:

Costs ordered against the claimant in any claim for defamation or breach of privacy shall not exceed the amount (if any) which is a reasonable one for him to pay having regard to all the circumstances including:

(a) the financial resources of all the parties to the proceedings, and

(b) their conduct in connection with the dispute to which the proceedings relate.

You can see that the idea is that the Court is allowed maximum discretion to make the right order in any particular case. This type of provision generally leads to the fairest results.

The government (whether this one or the Tories once they get in in May) will almost certainly accept Lord Justice Jackson’s recommendations. They do however require some new statutes which require an Act of Parliament. A major purpose of the current campaign as I see it is to ensure that this issue remains in the public eye in order to make sure that these reforms are given high priority in the next session.

Effect on BCA v Singh

The problem for Simon Singh is that these reforms will not be implemented in time for his case. He will have to continue to defend the action out of his own pocket (I understand that the Guardian have refused to fund the litigation, presumably due to the risks). His behaviour in doing so is admirable, and very brave.

This means that the forthcoming decision of the Court of Appeal is very important. For a summary of what is going to happen next week, see Jack of Kent’s post here.

Go off and sign your name to the petition if you haven’t already. They do, basically, have a point.

Recent coverage

Simon Singh’s Court of Appeal case is coming up next week (23 February 2010). There has been some print media coverage of the various issues recently, which is worth a brief consideration. In particular Nick Cohen had quite a bit to say in the Guardian about a speech by Lord Hoffman (a now retired law lord), which you can find here. The first thing to note about Lord Hoffman is that he is a completely brilliant man. He has a brain the size of a planet and, speaking as someone who spends quite a lot of time trying hard to Understand The Law, is very very good at explaining complicated concepts in a way that even I can understand. The second point is that he is notoriously fiercely independent (as many extremely intelligent people are), unafraid of defying the government and – please note this – a liberal. In particular, he has consistently refused to lend any legitimacy to any form of torture. He was part of the House of Lords committee who said that General Pinochet had to be extradited to Spain to face trial there. And that decision was set aside (by different judges) because he had failed to declare that he was a chairman and director of Amnesty International’s charity arm. He is very very far from being an establishment stooge.

I urge you all to go and read Lord Hoffman’s speech. He makes a number of the points I have made in Part 1 of this post (and let me tell you, it is quite something to be saying that Lord Hoffman agrees with me, rather than the other way round). He points out various facts about Dr Ehrenfeld’s political sympathies and the holes in her claims (as recorded by Mr Justice Eady in his judgment: see Part 1). His point is that when you are considering reforming the law, you have to test your reform by assuming in turn both that the claimant is right, and that the claimant is wrong. The principles of the law have to reach a just result, using a just procedure, without assuming one side is right and for all kinds of different factual situations. It’s no good having a law which ensures that the defendant to a libel action always gets off, in circumstances where that defendant has, for example, wrongly and publicly called the claimant a paedophile.

Nick Cohen deals with this not by engaging Lord Hoffman on the point he is making, but by doing four things. First, he pretends that Lord Hoffman cannot have an independent view. This is just silly. Second, he refers to some irrelevant background information about Mahfouz (irrelevant because the libel action was about allegations that he funds terrorism, not that he misstated the financial position of BCCI: that is, Mr Cohen is setting up a straw man). Third, he appears to suggest that Lord Hoffman is anti-Semitic or at the very least anti-Israel (see the seventh paragraph). Lord Hoffman happens to be Jewish. Fourth, he cites various examples said to be of “libel tourism” which, for the reasons set out in Part 1, don’t prove anything at all. He goes on to say that the rallying point for English liberals is the libel action by the BCA against Simon Singh – but that, of course, has nothing at all to do with libel tourism!

The latest edition of Private Eye (which I love and to which, for the avoidance of doubt, I have been a subscriber since the age of 16) has a reference to Lord Hoffman’s speech. I’ll put a link up to a copy of it as soon as I work out how (sorry: v poor nerd knowledge). Private Eye comment in their usual gleeful tone that Mr Justice Eady was the only practising libel judge not present at Lord Hoffman’s speech. They suggest that this might be because Lord Hoffman overturned one of Eady J’s decisions in a previous case, saying in trenchant terms that the decision was unsustainable and wrong. Well, perhaps. Or it might have been because he felt a bit shy at listening to what Lord Hoffman actually did say during the speech:

Comments such as these were accompanied by a good deal of disgraceful personal abuse of Mr Justice Eady.

Or maybe he just had something else on that night.

I really would greatly prefer it if the print media would stick to attacking things that actually need to be attacked. There are some serious issues relating to libel law (not just English libel law) which do need reform. Most aspects of libel law itself are, however, perfectly fine.

Burden of proof

Jack of Kent has explained with his usual clarity what the law is and why here.

I don’t think this is in any way a straightforward issue, but on balance I think the law should be changed so that the claimant has to establish that the statement is false.

Public interest defence

One of the really weird things about the campaign being run by Index on Censorship and English PEN is that they seem to think that there is no public interest defence in English law. Essentially, the idea is that is would be a defence to a libel action to say something that turned out to be wrong, if you had taken care to check your point so far as possible and if it was generally important that such topics were freely discussed.

The thing is, there is.

And it’s been around for a while. A defence of honest comment on matters of public interest has been a part of English law since at least 1863. You shouldn’t be surprised by this – the English courts have been protecting freedom of speech since long, long before any of the modern human rights treaties. As Lord Goff (another utterly brilliant lawyer) said in the Spycatcher litigation (pg 30 of the House of Lords’ judgment here):

I wish to observe that I can see no inconsistency between English law on this subject and article 10 of the European Convention on Human Rights. This is scarcely surprising, since we may pride ourselves on the fact that freedom of speech has existed in this country perhaps as long as, if not longer than, it has existed in any other country in the world. The only difference is that, whereas article 10 of the Convention, in accordance with its avowed purpose, proceeds to state a fundamental right and then to qualify it, we in this country (where everybody is free to do anything, subject only to the provisions of the law) proceed rather upon an assumption of freedom of speech, and turn to our law to discover the established exceptions to it.

The public interest defence extended in certain circumstances to factual assertions: where discussion was desirable “for the common convenience and welfare of society” or “right in the interests of society.” I am quoting from decisions dating from the 1800s ((1834) 1 CM&R 181 and (1870) LR 5 QB 608 if you’re really keen). The key case for our purposes, however, is Reynolds v Times Newspapers (in 1999) which established what is known as the Reynolds defence. The importance of Reynolds was that it confirmed that factually inaccurate statements (as well as comments) could be defended on grounds of public interest.

You can read about Reynolds on Wikipedia (so there’s not really any excuse for misleading campaigning about it). You can read the actual House of Lords’ judgment here. The House of Lords set out 10 factors which would be relevant to determining whether the public interest was made out in any particular case (they’re in the Wiki article if you can’t be arsed trawling through the judgment). Lord Nicholls concluded by saying:

In general, a newspaper’s unwillingness to disclose the identity of its sources should not weigh against it. Further, it should always be remembered that journalists act without the benefit of the clear light of hindsight. Matters which are obvious in retrospect may have been far from clear in the heat of the moment. Above all, the court should have particular regard to the importance of freedom of expression. The press discharges vital functions as a bloodhound as well as a watchdog. The court should be slow to conclude that a publication was not in the public interest and, therefore, the public had no right to know, especially when the information is in the field of political discussion. Any lingering doubts should be resolved in favour of publication.

The decision in Reynolds was applied again and approved in a subsequent House of Lords case called Jameel v Wall Street Journal (in 2006). You can read the judgment here. Lord Hoffman (yes, the very same) said that Lord Nicholls’ “ten tests” were to be used as guidance, not as hurdles. That is, Jameel made is easier for a defendant to establish that his comments, including factual statements, were in the public interest.

This defence would have been available to Dr Ehrenfeld if she had chosen to defend the Mahfouz libel action. It is also available to Simon Singh. I assume he will run it in the event (which hopefully will not occur) that his appeal does not succeed.

The Real Problem

The real problem with libel cases in the English courts is not the law of libel. It is the cost of defending such an action and the fact that even if you win and in principle obtain an order from the court that they have to pay your costs of the action, you will never get 100% of those costs. Successful parties to litigation usually recover about 75% of their legal costs from the losing side. This means that you are never, I repeat never, a complete winner in any case. There is always a hole in your pocket at the end of the day. (I tell all my clients this. You would be amazed, just amazed, at how many want to carry on anyway. Litigation is a fool’s game to be avoided if at all possible.)

This is the problem Ben Goldacre is talking about here. Matthias Rath sued the Guardian over statements made in Ben Goldacre’s Bad Science column, then dropped his case as it was total utter shite (a legal term), so the Guardian was the out and out winner. But it was still left with a £170k hole.

This really does have a massively chilling effect on freedom of speech. It is no good having the Reynolds defence available to you if even when you win you have still had to sell your house to pay the lawyers.

So why are libel actions so expensive? Is it just because evil lawyers are milking these claims for everything they can get? Or what?

The answer is… a bit complicated. And the solution is not as clear cut as you might expect. To be discussed in Part 3…

“Dishonest. “Misleading.” “Dishonest.” “Irresponsible.” Ordered numerous invasive procedures (including colonoscopies and lumbar punctures) which were “contrary to the clinical interests of Child 2.” Same for Child 1. Same for Children 3, 4, 9, 5, 12, 8 and 7. Lied about this to the Ethics Committee even though not qualified to determine whether in fact in the relevant child’s clinical interests (see pages 20 – 21 and frequently thereafter). “Contrary to the clinical interests of Child 10,” he gave Child 10 an experimental drug, for “experimental reasons”, called Transfer Factor. He part owned the company which owned Transfer Factor. The dosing with Transfer Factor was not recorded in Child 10’s medical records.

Page 45:

“In reaching its decision, the Panel notes that the project reported in the Lancet paper was established with the purpose to investigate a postulated new syndrome and yet the Lancet paper did not describe this fact at all. Because you drafted and wrote the final version of the paper, and omitted correct information about the purpose of the study or the patient population, the Panel is satisfied that your conduct was irresponsible and dishonest.

The Panel is satisfied that your conduct at paragraph 32.a would be considered by ordinary standards of reasonable and honest people to be dishonest.”

He “showed a callous disregard for the distress and pain” which the children from whom he caused blood to be taken might have suffered. Blood taken at his son’s birthday party. He paid them £5.

Note – the GMC applies the criminal (proof beyond reasonable doubt) not the civil (more likely than not) standard of proof. That is, any doubt, and the allegation is not proved.